Apple on Saturday placed Wistron Corporation on probation after finding fault with the company over payment delays in October and November to workers at the Taiwanese contract manufacturer's India facility.
The development comes one week after violence broke out at the Wistron's Bangalore, India, facility as a large number of workers went on a rampage last Saturday over issues related to payment of salary.
The local government report also found lapses in the way Wistron tried to scale up production in the factory.
The investigation found that the practices put in place at the plant with regard to payment of wages and overtime work were not in line with the provisions of law.
'Working Around the Clock'
"Apple employees and independent auditors hired by Apple have been working around the clock to investigate the issues which occurred at Wistron's Narasapura facility," Apple said in a statement.
"While these investigations are ongoing, our preliminary findings indicate violations of our Supplier Code of Conduct by failing to implement proper working hour management processes. This led to payment delays for some workers in October and November," the company said.
Apple said Wistron will not receive any new business from Apple before they complete corrective actions, dealing a blow to its plans to scale up production at the India facility.
"As always, our focus is on making sure everyone in our supply chain is protected and treated with dignity and respect. We are very disappointed and taking immediate steps to address these issues," Apple said.
"We have placed Wistron on probation and they will not receive any new business from Apple before they complete corrective actions. Apple employees, along with independent auditors, will monitor their progress. Our main objective is to make sure all the workers are treated with dignity and respect, and fully compensated promptly."
Wistron Apologizes to Workers
Wistron on Saturday admitted mistakes and apologised to all workers and also said that it will remove the Vice President who oversees the company's business in India.
"Since the unfortunate events at our Narasapura facility we have been investigating and have found that some workers were not paid correctly, or on time. We deeply regret this and apologize to all of our workers," Wistron said.
"This is a new facility and we recognise that we made mistakes as we expanded. Some of the processes we put in place to manage labour agencies and payments need to be strengthened and upgraded," it added.
The company said that it is "working hard" to ensure all workers are fully compensated immediately.
"We have established an employee assistance program for workers at the facility. We also set up a 24-hour grievance hotline in Kannada, Telugu, Tamil, Hindi and English to ensure all workers can voice any concerns they may have anonymously," Wistron said.